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Dated: 17.03.2025

DGFT Amends the Procedure for Export Authorization for Stock and Sale of SCOMET Items

The Directorate General of Foreign Trade (DGFT) has proposed amendments to Paragraph 10.10 of the Handbook of Procedures (HBP) under the Foreign Trade Policy (FTP) 2023. These amendments aim to streamline and regulate the export authorization process for “Stock and Sale” of SCOMET items.

Key Highlights of the Amendments:

1. Scope & Applicability of the Stock and Sale Policy:

• The Stockist is an entity abroad that receives SCOMET items from an Indian exporter for further transfer to end-users.
• The Stockist must be a subsidiary, principal (parent) company, affiliate, or an Original Equipment Manufacturer (OEM)/Electronic Manufacturing Services (EMS)/Contract Manufacturer (CM).
• Export is allowed only with an End Use Certificate (EUC) from the Stockist.

2. Export Authorization Process:

• Applications for stock and sale export must include:
  • Proof of corporate relationship between the Indian exporter and Stockist.A detailed list of destination countries for exports.
• • Purchase Orders, Technical Specifications, and compliance documentation.
  • An undertaking ensuring no diversion to military or Weapons of Mass Destruction (WMD) use.
  • Stockist entities must be registered and licensed in their respective countries.
• Stockist entities must be registered and licensed in their respective countries.

3. Re-Export and Transfer Regulations:

• In-principle approval is granted for re-export from the Stockist to specific pre-approved countries.
• No additional authorization is required for transfers within the country of the Stockist.
• Re-export to new countries requires separate approval from DGFT.
• All transfers must comply with export control regulations of the Stockist’s country.

4. Reporting and Compliance Requirements:

• Post-export reporting is mandatory for re-exports and in-country transfers.
• Annual inventory reporting is required by January 31st for all stock and sale transactions completed in the previous year.
• Non-compliance may result in penalties or cancellation of authorization.

5. Repeat Order Cases:

• Repeat exports of the same SCOMET items to the same Stockist and end-users will be approved without additional consultation with the Inter-Ministerial Working Group (IMWG).

6. Validity and Revalidation:

• SCOMET items exported under this policy must reach the final end-user within the authorization period.
• Revalidation of authorization is allowed under specified procedures.

Impact of the Amendments:

• For Indian Exporters: Simplified application process and structured reporting requirements.
• For Stockists & OEMs: Clear guidelines for inventory and re-export, reducing bureaucratic hurdles.
• For Regulators: Enhanced monitoring to prevent unauthorized diversion of sensitive items.

The DGFT’s amended Para 10.10 of the Handbook of Procedures (HBP) under FTP 2023 streamlines the export authorization for “Stock and Sale” of SCOMET items. It allows Indian exporters to ship certain controlled items to an overseas Stockist (subsidiary, OEM, or affiliate) for subsequent transfer to end-users, subject to End-User Certification (EUC) and compliance with export control regulations.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

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Source: DGFT, Ministry of Commerce, Govt. of India

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